Nanko Shipping, USA v. Alcoa, Inc.

Plaintiffs Nanko Shipping USA, Nanko Shipping Guinea, and their President and sole shareholder, Mori Diane, brought this suit to enforce shipping rights as alleged third party beneficiaries who are entitled to contractual rights held by the Republic of Guinea. Alcoa, Inc. and Alcoa World Alumina LLC move to dismiss for failure to join an indispensable party, among other reasons. Plaintiffs failed to name the Republic of Guinea as a party, likely because it is entitled to sovereign immunity. Because the Republic of Guinea is indispensable, the case will be dismissed. Plaintiffs move to file a Second Amended Complaint, but the proposed filing would not survive a motion to dismiss and therefore the motion to amend will be denied as futile.

I. FACTS

Because Plaintiffs contend that their proposed Second Amended Complaint overcomes the objections raised in Defendants' motion to dismiss, the Court analyzes the motion to dismiss in light of Plaintiffs' best attempt to state a claim, i.e. their proposed Second Amended Complaint (SAC). See Second Am. Compl. [Dkt. 14-1].

In 1963, the Republic of Guinea (Guinea) and Harvey Aluminum Company of Delaware (Halco)[1] executed the Compagnie des Bauxites de Guinee (CBG) Convention to develop bauxite mining and processing in Guinea. SAC at 1-2; see Mot. to Dismiss [Dkt. 7], Ex. A (Convention) [Dkt. 7-2]. CBG is a corporation owned 49% by Guinea and 51% by Halco. SAC at 2 (introduction). Article 9 of the Convention gave Guinea a qualified right to ship 50% of the bauxite produced:

The Government [of Guinea] reserves the right, inasmuch as it does not adversely affect the sale of bauxite, to have the exported tonnage load[illegible] a proportion [of] which shall not exceed fifty percent on ships operating under the Guinean flag or an assimilated flag, or on ships chartered by the Government on the international shipping market, the above being, however, under the express condition that the freight tariffs practiced are lower or equal to those which are quoted at that particular time on the international shipping market for identical conditions for the freight and the shipping routes considered.

Convention, Art. 9; see also SAC ¶ 14.[2] Over the past 50 years, CBG has produced and exported over 600 million tons of bauxite from Guinea; the bauxite has been used to produce approximately 150 million tons of aluminum valued at over $400 billion. SAC ¶ 9.

On August 17, 2011, Guinea entered into a Technical Assistance Agreement (TAA) with one of the Plaintiffs, Nanko Shipping Guinea (sometimes, NSG).[3] Id. ¶ 20. Under the terms of the TAA, Guinea allegedly authorized Nanko Shipping Guinea to exercise Guinea's shipping rights under Article 9 of the Convention thereby making Nanko Shipping Guinea a third party beneficiary to the Convention. Id. ¶¶ 3, 4, 20, 72. Nanko Shipping Guinea asserts a right to control CBG bauxite shipments for the benefit of the Guinean government and people. Id. ¶ 4.

Nanko Shipping USA owns 90% of the shares of Nanko Shipping Guinea and Mori Diane owns the remaining 10% of the shares. Id. ¶ 3. Nanko Shipping Guinea, Nanko Shipping USA, and Mr. Diane brought this suit against Alcoa, Inc. and its affiliate, Alcoa World Alumina LLC (collectively Alcoa Defendants), alleging that the Alcoa Defendants refused "to implement NSG's rights via the TAA, including the effectuation of shipping contracts..." SAC ¶ 63; see also Am. Compl. [Dkt. 10-1] ¶ 63. Plaintiffs' Amended Complaint asserts two counts: Count I, breach of third party beneficiary contract; and Count II, race discrimination in contracting in violation of 42 U.S.C. § 1981. Am. Compl. ¶¶ 57-76. The Alcoa Defendants move to dismiss, arguing that they cannot be liable for breaching a contract-i.e. the Convention (which is the alleged source of Plaintiffs' third party rights)-when the Alcoa Defendants are not parties to the Convention. In response, Plaintiffs move to file a Second Amended Complaint, realleging Counts I and II and seeking to add Halco as a defendant (because Halco is a party to the Convention) and to add claims for conspiracy under 42 U.S.C. § 1985, tortious interference with contract and/or prospective business advantage, and civil conspiracy. SAC ¶¶ 69-104.

Plaintiffs essentially allege that the Alcoa Defendants are liable for breach of the Convention, although not signatories to the Convention, because the Alcoa Defendants are alter egos to Halco. Plaintiffs contend that Halco is "essentially a conduit via which major corporate aluminum entities, such as Alcoa Defendants, by way of unknown legal instruments, own, control and manage Halco." Id. at 2 (introduction). Plaintiffs describe the business relationship between Alcoa Inc. and Halco as follows: "[a]t some point after or when the bauxite is shipped, upon purchase of bauxite from CBG, Halco simultaneously transfers ownership of the bauxite to its Consortium Members." Id. Plaintiffs define the "Consortium" as a group of three companies: Alcoa Inc. (a U.S. corporation), Rio Tinto (an Anglo-Australian company), and DADCO (a Swiss company). Id. ¶ 5. Together, Alcoa Inc. and Rio Tinto own a majority of the shares of Halco, and the three Consortium Members "comprise the Halco Board of Directors."[4] Id. ¶¶ 5-6. Plaintiffs allege that "Halco and Alcoa should be treated as a single entity, and alter ego liability should attach since the two businesses actually function as a single entity in many respects, and the notion that Halco is a parent is a fiction." Id. ¶ 6.

The Alcoa Defendants move to dismiss on numerous grounds, including lack of standing, failure to join an indispensable party, and failure to state a claim; Plaintiffs oppose. See Mot. to Dismiss [Dkt. 7]; Opp'n [Dkt. 11]; Reply [Dkt. 13]. Plaintiffs attempt to rescue their case through the filing of a Second Amended Complaint, and the Alcoa Defendants oppose on grounds of futility. See Mot. for Leave to File [Dkt. 14]; Opp'n [Dkt. 15]; Reply [Dkt. 17]. As described below, the case will be dismissed and the motion to amend will be denied.

II. LEGAL STANDARDS

A. Motion to Dismiss For Lack of Jurisdiction

A motion to dismiss based on lack of standing to sue as a legal entity is governed by Federal Rule of Civil Procedure 12(b)(1). When reviewing a motion to dismiss for lack of jurisdiction under Rule 12(b)(1), a court must review the complaint liberally, granting the plaintiff the benefit of all inferences that can be derived from the facts alleged. Barr v. Clinton, 370 F.3d 1196, 1199 (D.C. Cir. 2004). Nevertheless, "the court need not accept factual inferences drawn by plaintiffs if those inferences are not supported by facts alleged in the complaint, nor must the Court accept plaintiff's legal conclusions." Speelman v. United States, 461 F.Supp.2d 71, 73 (D.D.C. 2006). To determine whether it has jurisdiction over the claim, a court may consider materials outside the pleadings. Settles v. U.S. Parole Comm'n, 429 F.3d 1098, 1107 (D.C. Cir. 2005). The party claiming subject matter jurisdiction bears the burden of demonstrating that such jurisdiction exists. Khadr v. United States, 529 F.3d 1112, 1115 (D.C. Cir. 2008).

B. Motion to Dismiss for Failure to Join Indispensable Party

Federal Rule of Civil Procedure 12(b)(7) permits dismissal of a complaint for failure to join a party under Rule 19. In evaluating the need for an absent party, a court must accept as true the allegations set forth in the complaint and may consider extrinsic evidence submitted by the parties without converting a motion to dismiss to one for summary judgment. 16th & K Hotel, LP v. Commonwealth Land Title Ins. Co., 276 F.R.D. 8, 12 (D.D.C. 2011). The burden is on the moving party to demonstrate "the nature of the interest possessed by an absent party and that the ...

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